Under the title "Through the Gateway of Cryptocurrency: Iran's 'Hellish' Plan Against Sanctions," Sky News reported that as of September, Iran will lift the ban it imposed on cryptocurrency mining, a move aimed at circumventing international sanctions. With this announcement, thousands of local and international miners are preparing to resume operations in Iran, which is considered one of the most attractive countries for these activities.
Iran offers relatively cheap electricity and numerous facilities, disregarding the environmental impacts of the mining process, all to leverage mining activities to bypass international sanctions.
**Iran's Active Role Globally**
Iran was one of the world's most active countries in the mining sector. Although its population constitutes less than 1% of the total global population, approximately 4.5% of the world's cryptocurrency mining operations occurred in Iran. In May, Iranian authorities suspended mining licenses due to a severe downturn in electricity supply, resulting in complete outages in some neighborhoods of Tehran for several days.
Mining operations require significant electricity, consuming a considerable portion of the national energy network, especially Bitcoin, which is particularly attractive to miners in Iran. Studies indicate that mining Bitcoin requires 707 kilowatt-hours per hour. Mining activities accounted for 10% of the country’s electricity consumption.
**Billion Dollar Estimates**
Iran began issuing licenses and allowing miners to operate in 2019, during the peak of sanctions imposed by the previous U.S. administration on Tehran, which caused oil exports to drop to about 20%, previously accounting for around 70% of public treasury revenues. Consequently, the country sought alternative sources to fund its budget.
A study published by Blockchain Elliptic indicated that a kind of deal seems to have occurred between Iranian authorities and miners, where the former benefits from taxes imposed on thousands of miners (estimated at around one billion dollars in 2020). Furthermore, cryptocurrencies provide hard currency, which the ruling regime can use to cover its imports during a time when the country faced significant shortages of global currencies.
On the other hand, miners benefited from the low electricity prices in Iran, as the state produces it from natural gas extracted in large quantities globally. Miners also benefited from the bureaucratic and financial facilitation provided by Iranian authorities, including the lack of environmental conditions imposed on them.
Digital currency expert Randa Nasr Al-Din stated to Sky News Arabia: "It is highly likely that Iran will increase its cryptocurrency mining activities in the next six months due to three objective factors."
She explains, "There is a significant migration of mining operations from China, which accounted for about 60% of global mining activity before the Chinese authorities imposed a series of environmental conditions on miners who used coal for energy, enhancing Iran's presence."
She added, "The Iranian regime is in urgent need of large quantities of global currencies that mining operations may provide. Lastly, since the autumn and winter seasons have the lowest electricity consumption in Iran, observers believe that Iran’s contribution could rise from 4.5% to 10% within one year."
Nasr Al-Din continued: "Iranian authorities are currently concerned about the efforts of global financial institutions, especially in the United States, to develop their legal and economic frameworks and monitoring mechanisms for the cryptocurrency market, which could enable them to impose sanctions on certain countries and regimes in the future, with Iran undoubtedly topping that list."
